understandig the working process in finance dacision making

May 28th, 2015

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Abilene Christian University

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The business of banking involves taking and managing risks. Lending, for example, involves the risk that the borrower will not pay back the loan as promised, and paying a fixed rate of interest on term deposits involves the risk that rates will drop, leaving the bank earning less on its investments than it is paying out on deposits. Risk is not unique to banking, of course; all types of companies engaged in international activities, for example, face the risk of unfavorable movements in exchange rates. But changes in banking and financial markets have increased the complexity of banking risks. And the position of banks in modern economies has made the management of banking risks ever more important to financial stability and economic growth.

Assignment (International Financial Management)Topic:Basel AccordsSubmitted to:Sir Najaf IqbalSubmitted by:Zubaria Aslam (BC07013)Class:B.Com (7th Sem.)Punjab University Gujranwala CampusBasel AccordWhat is Basel Accord?A set of agreements set by the Basel Committee on Bank Supervision (BCBS), which provides recommendations on banking regulations in regards to capital risk, market risk and operational risk. The purpose of the accordsis to ensure that financial institutions have enough capital on account to meet obligations and absorb unexpected losses.How Basel Accords was formed in history?The business of banking involves taking and managing risks. Lending, for example, involves the risk that the borrower will not pay back the loan as promised, and paying a fixed rate of interest on term deposits involves the risk that rates will drop, leaving the bank earning less on its investments than it is paying out on deposits. Risk is not unique to banking, of course; all types of companies engaged in international activities, for example, face the risk of unfavorable movements in exchange rates. But changes in banking and financial markets have increased the complexity of banking risks. And the position of banks in modern economies has made the management of banking risks ever more important to financial stability and economic growth.In the United States, banks, in addition to their economic role in funding households and businesses, a